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The Singer Division of Patio Enterpises currently earns $2.60 milion a new asset that will add to profnt. The investment has a cost of $3,387,000
The Singer Division of Patio Enterpises currently earns $2.60 milion a new asset that will add to profnt. The investment has a cost of $3,387,000 and will have a yearly cash flow of $843,000. The asset will be depreciated using the straight-line method over a six-year life and is expected to have no salvage value. Divisiona and has division al assets of $20.0 milion. The division manager is considering the acquisition or denominator. The company's cost of capital is 12 percent. ignore taxes l performance is measured using ROI with beginning-of-year net book Required a. What is the divisional ROI before acquisition of the new asset? (Enter your answer as a percentage rounded to 1 decimal b. What is the divisional ROI in the first year after acquisition of the new asset? (Enter your answer as a percentage rounded to 1 decimal place (u.e. 32.1)
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